This study will analyze the impact of intrafamilial resource allocation and interfamilial differences on both childhood development and subsequent adult outcomes. It will extend and apply recently developed models of intrafamilial allocation to a rich new data set using unobserved (or latent) variable methodologies. Our conceptual framework is the maximizing model of intrafamily resource allocation developed by Behrman, Pollak and Taubman (forthcoming, Journal of Political Economy). The study involved theoretical, econometric, and empirical components. Among the issues addressed are: To what extent do parents compensate with time and economic resources for variations in genetic endowments? To what extent do they favor particular children because of gender or birth order? How important are observed variables (e.g, parental education, income, health status) compared to unobserved family background variables in determining childhood development (e.g., educational achievement and attainment and adult success (e.g., socioeconomic status, and earnings).